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Fortune 500 Daily & Breaking Business NewsSat, 10 Dec 2016 05:09:35 +0000enhourly1http://wordpress.com/http://1.gravatar.com/blavatar/dab01945b542bffb69b4f700d7a35f8f?s=96&d=http%3A%2F%2Fs2.wp.com%2Fi%2Fbuttonw-com.pnggovernment shutdown – Fortunehttp://fortune.com
Fortunehttps://s0.wp.com/wp-content/themes/vip/fortune/assets/images/fortunelogo.pnghttp://fortune.com25040Atlantic City Is Facing a 3-Week Government Shutdownhttp://fortune.com/2016/03/22/atlantic-city-faces-3-week-government-shutdown/
http://fortune.com/2016/03/22/atlantic-city-faces-3-week-government-shutdown/#respondTue, 22 Mar 2016 14:50:34 +0000http://fortune.com/?p=1596387]]>Atlantic City Mayor Don Guardian said on Monday that the city’s financial crisis will force a partial government shutdown for three weeks, with city hall closed for the period and public employees working without pay.

Police and firefighters in the New Jersey seashore city, which is dominated by its gaming industry, have agreed to work without pay for the three-week period, which will begin April 8, said Guardian, who spoke in Jersey City where he was attending a panel on casino expansion in the state.

The city should begin receiving second-quarter 2016 tax payments on May 2, when it expects to be able to reopen City Hall.

The city is “making every effort to find solutions prior to the April 8th deadline,” Guardian said in a statement.

The gambling hub’s tax base has been decimated by casino competition in neighboring states. Four of Atlantic City’s 12 casinos shut in 2014 and remain closed, putting thousands of people out of work.

Bills are making their way through the state legislature to take over city operations and to end devastating casino property tax appeals, but neither would come in time to help Atlantic City with its April deadline.

Guardian on Monday told reporters that Atlantic City would owe its workers back pay.

The city will make its April debt service payment of about $600,000, he said. Schools will remain open during the three-week period.

Wall Street stock futures are sharply lower this morning, dragged down by a four-year low in the Chinese yuan and more misery in the oil markets, where crude futures hit a new six-year low of $36.13 a barrel on fears that the world is running out of places to store surplus oil. The dollar is just about holding below $1.10 to the euro as investors continue to unwind positions after being caught out by the European Central Bank last week.

Today’s must-read story is from Fortune‘s Phil Wahba and it looks back at last year’s Men’s Wearhouse MW purchase of rival retailer Jos. A Bank--a $1.8 billion deal that has not worked out well for the clothier.

Here’s what else you need to know today.

1. China’s ‘Warren Buffett’ Goes Missing

The man known as ‘China’s Warren Buffett’ has become the latest high-profile businessman to go missing. Guo Guangchang, chairman of one of China’s biggest conglomerates, Fosun, has been out of contact with the company for at least a day, Caixin said. Trading was halted Friday in two of conglomerate's listed firms in Hong Kong. Postings yesterday on Chinese social media said Guo was seen being taken away by police at a Shanghai airport.

2. U.S. retail sales

The Commerce Department is expected to report a 0.3% uptick in U.S. retail sales in November, thanks in part to higher incomes and cheap gasoline prices that helped lift vehicle purchases. November included the beginning of the holiday shopping season, when fewer shoppers hit stores on Black Friday, but online sales soared on Cyber Monday. U.S. consumer sentiment is also expected to have jumped last month to a four-month high of 92.0, thanks to low gas prices.

3. Sea-Doo maker reports earnings

BRP DOO, which makes Ski-Doo snowmobiles and Sea-Doo watercraft, is expected to report lower third-quarter profit after the Canadian company saw an increase in expenses during its most recent quarter. The company has also seen its sales hurt overseas by the strong U.S. dollar as well as by Western sanctions in Russia, which is one of its biggest markets.

4. Congress votes to extend spending bill deadline

Today is the deadline for Congress to pass a federal funding bill in order to prevent another government shutdown, but lawmakers are expected to only pass a stop-gap measure that would push back the deadline. Congress is working on hammering out a $1.15 trillion bill that would keep federal agencies funded through September, but leaders have yet to agree on a handful of attached issues such as Republicans’ plans to defund Planned Parenthood.

5. ‘The Big Short’ hits theaters

The movie based on Michael Lewis’ 2010 book about the housing bubble and credit default swaps opens in limited release (in Los Angeles and New York) before its nationwide release, on Christmas. The film, which follows the stories of several people who predicted that the bubble would burst and set up the credit default swap market, stars Brad Pitt, Steve Carell, Ryan Gosling, and Christian Bale.

This week, the federal government will report on what is expected to be strong November retail sales, while a handful of major companies will release financial results from their most recent fiscal quarters. Lawmakers also face a Friday deadline to pass a federal funding bill and avoid another government shutdown. And, there should be an update about the antitrust review of the proposed Staples-Office Depot merger, while yet another high-flying tech company is expected to hold its initial public offering.

Here’s what you need to know for the week ahead.

1. Federal funding deadline

Friday marks the deadline for Congress to pass a $1.1 trillion federal spending bill that would let government agencies keep functioning. A stopgap funding passed at the end of September expires at the end of this week, and a long-term solution is needed if Congress is to avert a federal shutdown. Last week, the U.S. Senate passed a bill that would stop federal funding to Planned Parenthood and unravel Obamacare, though the president is expected to veto the bill.

2. U.S. retail sales

Also on Friday, the Commerce Department releases figures that are expected to show a 0.3% uptick in U.S. retail sales in November. Higher incomes and cheap gasoline prices helped lift vehicle purchases during the month, which includes the beginning of the holiday shopping season. Fewer shoppers hit stores on Black Friday, but online sales soared on Cyber Monday. U.S. consumer sentiment is also expected to have jumped this month to a four-month high, thanks to low gas prices.

3. Atlassian IPO

This year’s IPO market has been relatively tepid, but it could receive a boost this week when Australian cloud-based enterprise software company Atlassian is expected to make its public debut. As Fortune reported a couple of weeks ago, Atlassian is looking to raise up to $370 million in its IPO with its shares likely priced within a range that tops out at $18.50 per share. The high end of the range would value the tech unicorn (defined as a startup valued at $1 billion or higher) at just under $4 billion. Atlassian will debut on the Nasdaq under the symbol TEAM.

4. Earnings: Costco, Lululemon

Corporate earnings reports continue to trickle in, with a handful of large companies scheduled to report their latest financial results this week. On Tuesday, warehouse retailer Costco Wholesale COST is expected to report sales that fall short of analyst forecasts because of slow October store traffic likely outweighing a November rebound.

The Federal Trade Commission is set to wrap up its months-long antitrust review on Tuesday of Staples’ SPLSplanned $6.3 billion acquisition of rival office supply retailer Office Depot ODP. However, the regulator could extend its review after reports came out last week that agency officials are concerned that a combined company would harm competition as the only nationwide office supply retailer.

-- Reuters contributed to this post.

For more about retail, watch this Fortune video:

]]>http://fortune.com/2015/12/06/week-ahead-federal-funding/feed/0Retailers Open On Thanksgiving Evening, Starting Black Friday Sales EarlyhuddlestontomYou Can’t Call It A Do Nothing Congress Anymorehttp://fortune.com/2015/12/02/congress-passing-laws/
http://fortune.com/2015/12/02/congress-passing-laws/#respondWed, 02 Dec 2015 22:36:55 +0000http://fortune.com/?p=1458737]]>Don’t look now, but Congress is actually about to get a lot done.

This week, newly minted House Speaker Paul Ryan touted mammoth highway and education deals as proof that he is delivering on his promised return to "regular order" and bipartisan compromises that include conservative reforms. And there's a push to get deals done on the budget and taxes, too.

The roughly $300 billion, five-year highway bill, which also revives the Export-Import Bank, is all but guaranteed to head to President Barack Obama’s desk for his signature. Sure, Congress ducked tough long-term issues by keeping the gas tax at the same 18.4 cents a gallon it’s been at since Bill Clinton’s first year in office, but at least this time the punt was to 2020 -- partially paid for by a grab-bag assortment of sliced subsidies for big banks, oil sales, and the like.

The massive rewrite of the education law formerly known as No Child Left Behind also is years overdue and finally heading to the finish line amid an unusual alliance of teacher's unions seeking more flexibility on testing and Republicans wanting more local control.

And the really big one -- a trillion-dollar omnibus spending bill -- is just around the corner, although both sides are still squabbling over financial and environmental regulations and other issues that White House Press Secretary Josh Earnest warned Wednesday would lead to a government shutdown unless the GOP relents. But there's every reason to expect a deal before the Dec. 11 deadline.

Both Ryan and Senate Majority Leader Mitch McConnell are hoping to avoid a repeat of the shutdown dynamic of two years ago, and they've offloaded some of the hottest-button issues onto separate bills.

Bills defunding Planned Parenthood, repealing much of Obamacare, and nixing climate regulations will be heading to Obama's desk for certain vetoes. Republicans won't have the votes to override a veto, but at least they'll be able to say they finally passed their priorities -- and would do so again if voters elect a Republican president next year.

It's another variation on the two-track legislating that has become the norm in Washington -- passing bills aimed at placating the GOP base and striking bipartisan compromises necessary for real legislating and keeping the government open.

In past years, the political posturing bills gathered dust in the drawer of Senate Democratic leader Harry Reid.

To be sure, there's still plenty of horse-trading left to be done. Republicans are still talking tough about including some riders--prime breeding ground for legislative pork and special interest handouts--in a final omnibus spending package, even as Democrats talk of holding the line.

"There's never been an omnibus bill that I'm aware of that didn't have riders in it and this one will too," said Sen. Roy Blunt, R-Mo.

Earnest, meanwhile, warned that he couldn't imagine a scenario in which Obama agreed to another short-term spending bill, except one that gave Congress just a few more days to send something longer reaching to his desk.

Blunt said he hopes that the legislative process improves next year to "let people have a sense that the government is working again."

Much of this year was spent with Democrats filibustering appropriations bills in a dispute over spending; that won't be the case next year because of the two-year budget deal struck in John Boehner's final days as Speaker.

One item that Republican leaders have talked about including in the spending bill -- legislation restricting the flow of Syrian refugees -- will put the Obama administration in an awkward position, given an essentially veto-proof majority backed such a bill in the House before Thanksgiving.

President Obama has already signed a Defense authorization bill despite earlier White House veto threats over its Guantanamo provisions, and Earnest declined to issue a veto threat when asked about the refugee issue Wednesday, saying instead that they will look at what Congress does and will have an "open dialogue" with them.

The last wild card is a bipartisan deal to extend dozens of expiring tax cuts -- including perennials like the research and development credit, with tussles behind the scenes over which of the breaks to make permanent. That deal isn't yet baked and could slip into next year. Congress has made a habit of retroactively reviving expired tax breaks after failing to agree on extensions by the deadline.

In an op-ed in USA Today, Lew says that the economic progress made by the United States since the Great Recession--the creation of 13.2 million jobs since 2010, a 40-year-low jobless rate, and high consumer confidence--will be in jeopardy should Congress not increase the nation’s borrowing power.

“By waiting to the last minute to act on the debt limit, Congress could cause a terrible accident. This is not an abstraction; failure to raise the debt limit would mean devastating impacts for taxpayers, consumers and businesses,” Lew writes.

In the recent past, some Republican lawmakers have seen debt limit hikes as opportunities to impose spending cuts. Lew pointed to the debt ceiling standoffs of 2011 and 2013, the latter of which resulted in a partial government shutdown. Those instances, he says, “pushed our country to the brink of potential economic catastrophe.”

Without Congressional action, on November 3, the United States government will be operating with only the cash currently available, which Lew calls, “a profoundly irresponsible” course of action.

“Once again, I call on Congress to do the responsible thing for our country and raise the debt limit as soon as possible,” Lew says. “While time is short, I am confident that our congressional leadership will heed that call and protect the American people from unnecessary and unprecedented harm.”

]]>http://fortune.com/2015/10/26/congress-debt-limit/feed/0Jacob Lew Address Forum On Economic Costs Of Climate ChangeclairezillmanGovernment will run out of money in November, Treasury Secretary warnshttp://fortune.com/2015/10/02/debt-ceiling-november/
http://fortune.com/2015/10/02/debt-ceiling-november/#respondFri, 02 Oct 2015 17:49:24 +0000http://fortune.com/?p=1345710]]>The U.S. government will exhaust the extraordinary measures it has taken to avoid a debt-ceiling breach “on or about Thursday, November 5,” according to a letter sent by Treasury Secretary Jack Lew to Congressional leaders.

The news sets the stage for another potentially costly battle over whether or not to raise the statutory limit on the amount of debt that can be legally borrowed by the Treasury Department. Congress and the President have tussled over the debt ceiling ever since the Republican Party took over the House of Representatives in 2010, and argued against raising the debt ceiling unless the President also agrees to commensurate spending cuts. The President (and most objective economists) take the view that the act of raising the debt ceiling is merely Congress agreeing to issue debt to pay for things that it has already decided to fund, and that using the debt ceiling as a negotiating tool is a reckless mistake.

According to Chris Krueger, an analyst with Guggenheim Securities, the timing of the government’s collision with its debt ceiling could be good news, given Speaker Boehner’s recent announcement that he plans to step down on Oct. 31. In a note to clients Friday morning Krueger wrote: “This is bullish for the John Boehner Lame Duck goodwill tour that could see Boehner's final act as Speaker on October 31 involving raising the debtceiling (with a host of Democratic votes) and preventing the new GOP leadership from driving the country off a fiscal cliff.”

In other words, the deadline is close enough to the Speaker’s departure that Boehner could arrange to raise the debt ceiling on the back of Democratic votes, spurning the hard-right members of his caucus who want to see a confrontation with the President over spending. Many Republicans don’t want to see this happen because breaching the debt ceiling would likely cause the U.S. government to default, triggering a host of consequences up to and including a possible global financial panic.

Wall Street stock futures are starting the new quarter on a brighter note after the worst three-month period in over three years. Tentative signs of the Chinese economy bottoming out have helped sentiment today, putting a bit more bounce into commodity prices and other ‘risk assets’. Crude oil future are up over a dollar at $46.08, while the dollar is flat against the euro.

Today’s must-read story is from Fortune‘s Erin Griffith and it looks Twitter TWTR co-founder Jack Dorsey’s history with the company and why he was once pushed out of the CEO role that he has now reportedly reclaimed.

Here’s what else you need to know to start the day.

1. U.S., Russia to clear the air(strikes) over Syria

The U.S. and Russia are to hold talks about their respective air campaigns in Syria. Russia Wednesday started its biggest military action outside the former Soviet Union since its withdrawal from Afghanistan in 1989, but drew American ire for targeting, among others, CIA-backed rebels against the rule of President Bashar al-Assad, rather than the jihadists of the so-called Islamic State. The lack of coordination between the two powers (the U.S. refused a Russian request to clear Syrian airspace yesterday) has raised fears of an accidental clash between their airforces.

2. No government shutdown today

After weeks of debates and partisan posturing, Congress ended up passing a temporary spending bill that will keep federal agencies funded through December 11, averting a government shutdown that would have started today with the beginning of a new fiscal year. Republican Speaker of the House John Boehner helped shepherd the bill through the approval process, winning the support of a number of Democrats due to the heavy opposition within the Republican party that paved the way for Boehner’s resignation as House Speaker, effective at the end of October.

3. Micron Technology earnings

Semiconductor chipmaker Micron Technology MU reports fourth-quarter financial results today and the Boise, Idaho-based company is expected to post quarterly profit that falls below Wall Street’s expectations. Lower prices for computer chips have hurt Micron, which makes chips for computers as well as memory chips used for storing music, pictures and other data. With demand expected to pick back up in 2016, Micron’s stock recently rebounded from two-year lows following an analyst’s positive outlook.

4. Auto sales and jobless claims

U.S. automakers will report sales figures for the month of September, with an expected 17.6 million sales of car and light trucks that would represent an increase from the 16.5 million sold during the same month last year. Meanwhile, another report that could shed more light on the trajectory of the U.S. economy will come from the Labor Department, which is expected to show that the number of Americans who filed new applications for unemployment benefits increased by 3,000 to 270,000 last week.

5. Retailers face credit card chip deadline

Today brings the credit card industry’s self-imposed deadline for retailers to switch provide point-of-sale terminals that can read consumers’ chip-enabled cards. Announced two years ago by credit card companies, the deadline marks the transition from consumers sliding their credit cards’ magnetic strips to dipping their chip-enabled cards into a similar machine. However, only about 40% of credit card holders have started using their new chip cards, according to CreditCard.com, while it’s also possible that only about a quarter of U.S. merchants will have their equipment upgraded in time to meet today’s deadline. In other words, the swipe might not be dead yet.

-- Reuters contributed to this report.

]]>http://fortune.com/2015/10/01/5-things-thursday/feed/0US-RUSSIA-UN-SYRIA-CONFLICT-ASSEMBLYhuddlestontomRepublican Congressman ‘refuses to be blackmailed’ by GOP hardlinershttp://fortune.com/2015/09/29/republican-congress-tom-cole-shutdown/
http://fortune.com/2015/09/29/republican-congress-tom-cole-shutdown/#respondTue, 29 Sep 2015 19:22:25 +0000http://fortune.com/?p=1338772]]>In the House, two-thirds of Republican lawmakers have been elected since 2010. In the Senate, the average age has dropped by 17 years. That makes Oklahoma Republican Tom Cole--a 12-year House veteran who has operated at the top echelons of politics for decades--part of a shrinking class of experienced pros on Capitol Hill. Cole has seen dozens of leadership battles and sits on both the budget and appropriations committees. So, with Speaker John Boehner's resignation provoking another round of tumult--and a debt ceiling fight once again raising fears of a default or credit downgrade--Fortune's Nina Easton went to this seasoned lawmaker for the inside scoop.

Fortune: How nervous should the markets be?

Tom Cole: I don't think there is much to worry about in the short term. We are clearly going to pass a CR [continuing resolution]. The government is not going to shut down.

But that will likely only take us to December.

I still feel pretty optimistic. There are three forcing events. There is the transportation fund, and we are not going to stop road construction, so we'll get there. There is the debt ceiling, which is always a triggering event. And finally, there is the sequester, and people underestimate how determined rank and file members are to make sure we don't have a sequester [triggered] that hits the military for another $40 billion in cuts. I think the pressure to defend the military after having had one round of sequester cuts will force everybody to the table.

So, the debt ceiling will be raised without another fight and threat of default?

I think that is less certain. It's easier to pass if it's wrapped in a larger package. One hard vote is better than three or four, especially if protecting the military is part of it. The president could pass [a bill raising the debt limit] easily if he didn't insist on a clean bill. If we can't pass it that way and we do it stand-alone, Republicans will find 20-30 votes to get it through. One way or another, it will happen. But it won't be a drama-free event.

What is the future of the Export-Import Bank, which party hard-liners have nearly succeeded in killing?

I see it being attached to something and winning. This is an internal Republican fight; most Democrats are for the Ex-Im, and they're finding that this is a useful wedge issue to bring the business community to their side. We are already seeing the ripple effect of lost exports. [The bank's authority lapsed in July.] I'm not about to vote against companies providing thousands of jobs for my constituents.

What are the prospects for compromise on longer term funding for the government?

This rests in the hands of the president. The key player for us is [House Budget Chair] Paul Ryan. Anything that Ryan negotiates, we will get the votes for, and he's demonstrated he can put bipartisan votes together. We need something like the 2013 Ryan-[Patty] Murray deal that gives us a couple years of funding. We need some entitlement reform to pay for part of this, and it needs to extend to two years.

As Republicans, we don't want the prospect of a government shutdown or a fiscal cliff in an election year. It's a great way for Democrats to talk about irresponsible Republicans. And it's in the interest of all incumbents in Congress, [who are] already unpopular. Good sense and good politics argue that you want it out of sight and out of mind.

You've seen dozens of leadership struggles during your years in Washington. What do you make of the lawmakers who provoked this one?

There are 40 people who want to tell the other 200 what to do, even if it doesn't make any sense. What they are looking for is influence. But this is a group that is not large enough to control the Republican conference or even attract a viable alternative candidate [for Speaker]. We don't disagree with goals [such a defunding Obamacare or Planned Parenthood] but we refuse to be blackmailed into stupid tactics. This is a tactical debate. It's not about theology.

We've got people who don't seem to understand the basic reality of divided government and checks and balances. They clearly haven't read the Constitution. They act like they think Boehner is the Prime Minister, not speaker of one chamber.

They need to engage with members on how disruptive this talk of government shutdowns is, how difficult it is on business, the impact on hiring. We need to arrive on adult compromises that provide certainty--and that goes for this president, too. Otherwise, the tendency for business is not to invest. We get caught up in our own little world in Congress. These guys need to see a bigger world that needs certainty.

If Silicon Valley is known for its dynamic disruption, Washington D.C. has become known as the valley of dynamic dysfunction. How optimistic are you that this can change?

I'm reasonably optimistic. This is a time of great turmoil and low esteem. But Congress has been pretty productive. In 2013, we passed a joint budget for the first time since 2001. All appropriation bills have gotten through the appropriation committees. The deficit was $1.4 trillion when the Republicans took over the House; that has dropped to $483 billion--a trillion dollar swing in four years. We've passed major bipartisan bills on issues ranging from veteran suicide to human trafficking. We've reauthorized education reforms and a cyber bill is likely this fall.

This week starts with a meeting of the world’s top leaders in New York City and ends with a look at how the U.S. labor market fared in September. In between, Congress will try to pass a new spending bill that would avoid another government shutdown and a handful of other data releases should shed some more light on U.S. economic growth. Meanwhile, this will be the first week in a new job for Trevor Noah, Jon Stewart’s replacement as the host of The Daily Show.

Here’s what you need to know to start the week.

1. September jobs report

The Labor Department will release its monthly look at the U.S. employment picture on Friday. The unemployment rate is expected to have held steady at 5.1%, which is a seven-year low, with the U.S. economy likely adding 203,000 jobs in September -- more than the 173,000 it added in the previous month. Federal Reserve chair Janet Yellen said last week the central bank believes that “the economy is no longer far away from full employment,” an important milestone as the Fed considers finally implementing it’s highly-anticipated interest rate hike.

2. Wednesday’s deadline to avoid another government shutdown

Sept. 30 marks the final day of fiscal year 2015 and members of Congress are working to pass a bill that would allow U.S. federal agencies to continue spending money, thus avoiding the second federal government shutdown in two years. There is hope that Speaker of the House John Boehner’s resignation, announced Friday, will help clear the way for a short-term funding bill that would keep the government running through the rest of the calendar year. Boehner had been working to secure enough bipartisan votes to pass such a bill, but he faced opposition from conservatives within his own Republican party who refused to pass the bill unless it defunded Planned Parenthood. That group of conservatives had also threatened to vote to force Boehner out of his Speaker position.

3. World leaders gather for U.N. General Assembly

The 70th session of the United Nations General Assembly will draw leaders from the organization’s 193 member states to New York City on Monday. Talks will center around the European refugee crisis, Syria’s civil war, the recent Iranian nuclear arms agreement, and climate change. Russia’s Vladimir Putin has requested a side meeting with President Barack Obama to discuss the conflicts in Syria and Ukraine, which would mark the leaders’ first in-person meeting in over a year. On Friday, Obama and Chinese President Xi Jinping announced a new slate of policies to combat climate change, including a cap-and-trade program in China.

4. Data on consumer spending, manufacturing and vehicle sales

In addition to Friday’s jobs report, this week brings a handful of other economic data releases with the potential to affect markets. On Monday, the Commerce Department will release U.S. consumer spending data for August, which is expected to show a 0.4% bump in spending during that month after a gain of 0.3% in the previous month. And, on Thursday, new factory activity data is expected to show that the manufacturing sector grew at a slow pace in September, while U.S. automakers are expected to report a 12% increase in monthly sales year-over-year.

5. The (new) Daily Show

South African comedian Trevor Noah kicks off his stint as the new host of The Daily Show on Monday night on Viacom’s VIA Comedy Central. Noah, who takes over for former host Jon Stewart after previously appearing on the show as a correspondent, will be the program’s first new host since Stewart took over the role in 1999 (though, John Oliver briefly stepped into the role two years ago during a Stewart hiatus before getting his own show on HBO TWX). Stewart’s final show earlier this year paved the way for the latest of many recent transitions among late-night television personalities. Noah is entering a competitive late-night TV landscape, where several cable network options fight for ratings, and advertising dollars, with an equally crowded field of late-night talk shows on the major networks, including other recently installed hosts Stephen Colbert, on CBS CBS, as well as NBC’s CMCSA Jimmy Fallon and ABC’s DIS Jimmy Kimmel.

-- Reuters contributed to this post.

]]>http://fortune.com/2015/09/27/week-ahead-jobs-5things/feed/0House Speaker John Boehner Dept Homeland Security 2015huddlestontomBoehner calls his conservative critics ‘false prophets’http://fortune.com/2015/09/27/john-boehner-calls-critics-false-prophets/
http://fortune.com/2015/09/27/john-boehner-calls-critics-false-prophets/#respondSun, 27 Sep 2015 16:24:20 +0000http://fortune.com/?p=1333800]]>House Speaker John Boehner, in the first interview since his shock resignation announcement on Friday, called out as "false prophets" the rightwing fringe that forced his hand.

"The Bible says beware of false prophets, and there are people out there spreading noise about how much can get done," Boehner said Sunday on CBS' "Face the Nation."

The Ohio Republican, a 25-year House veteran, had been facing a vote to oust him from his leadership position pushed forward by a conservative rump group. Those Tea Party-aligned defectors were unhappy with Boehner's stewardship generally but also by what they viewed as his weak approach to stripping federal support for Planned Parenthood. And they have been angling to shut down the government over the issue.

Boehner on Sunday pledged that won't happen. Instead, he said the House will adopt a short-term patch from the Senate that will fund government operations into December. And Republicans will establish a special committee to investigate Planned Parenthood, the women's healthcare provider facing a firestorm of controversy over undercover videos showing workers discussing fetal tissue research.

Boehner was eyeing retirement, anyway, with plans to announce on his Nov. 17 birthday that he would step down at the end of the year. On Sunday, he said he moved the announcement up in part to spare colleagues a politically difficult vote to defend him, though he's confident he would have survived it easily, "with 400 votes, probably."

With a month left before Boehner hands back his gavel, some in Washington are wondering whether he will attempt a legislative blitz to pass big-ticket priorities held up by conservative opposition, such as immigration reform, a major budget deal, and new infrastructure spending. Boehner appeared to curb expectations, explaining, "I'm going to make the same decisions the same way I have over the last four-and-a-half years, to make sure that we're passing conservative legislation that is good for the country." But he added, "I don't want to leave my successor a dirty barn. So I want to clean the barn up a little bit before the next person gets there."

Boehner used his first valedictory sit-down to list the accomplishments of his term, name-checking spending reductions, a deal to extend most of the Bush tax cuts, and a (relatively modest) stab at entitlement reform. In the same breath, he noted that he got all of that done without the help of his most conservative members, who argued that those packages didn't go far enough."Really?! This is the part that I really don’t understand," the speaker said, pointing out that the framers of the American system intended for government to move deliberately. On whether his detractors are unrealistic in their expectations, Boehner said, "Absolutely!" But he also suggested they may be more cynical than they let on insofar as they "whip people into a frenzy believing they can accomplish things that they know, they know, are never going to happen."

And when it comes to Texas Sen. Ted Cruz, a Tea Party tribune and outspoken critic of the speaker, Boehner referred to the assessment he gave at an August fundraiser in Colorado. At that event, Boehner called Cruz a “jackass.”

]]>http://fortune.com/2015/09/27/john-boehner-calls-critics-false-prophets/feed/0House Speaker John Boehner Announces His Resignation At The CapitoltorynewmyerWhat Speaker John Boehner’s resignation means for the economyhttp://fortune.com/2015/09/25/boehner-resigns-economy/
http://fortune.com/2015/09/25/boehner-resigns-economy/#respondFri, 25 Sep 2015 15:57:15 +0000http://fortune.com/?p=1331246]]>John Boehner’s resignation as House Speaker has obvious political ramifications, and the economy will feel its effects too.

The resignation appears to be tied to the desire to pass a clean, short-term funding bill that would keep the government running through Dec. 11. Members of the Republican Party’s “Freedom Caucus” had been demanding that funding the government be tied to other measures such as defunding Planned Parenthood. Analysts now expect the House to avoid a shutdown, with some Republicans joining Democrats to pass a funding bill.

As Chris Kreuger, analyst with Guggenheim Partners, wrote in a note to clients Friday morning:

Boehner had been under considerable pressure from Tea Party-aligned members and it would appear that he did not have the votes to survive through the year and next (the argument being that Boehner was not confrontational enough). By resigning at the end of next month, we believe that Boehner ensures a shutdown will not happen next Thursday: he can rely on his core GOP supporters and the 188 House Democrats to keep the government from shutting down when the Senate sends a "clean" CR that funds the government until December 11 on Monday, September 28.

And that’s great news for the economy. In 2013, members of the Republican Party refused to fund the government unless President Obama and the Democrats agreed to a repeal of Obamacare. The standoff lasted 15 days and led to the furlough of 800,000 federal workers. The Congressional Research Service, surveying private analysts, said the shutdown shaved as much as 0.6% from fourth-quarter GDP growth that year.

There still will be opportunity, however, for legislative gridlock to lead to a government shutdown. According to Kreuger, Boehner’s resignation gives hardliners in the Republican party more power during a budget reconciliation process or during the debate to raise the debt ceiling, which must be done, he estimates, between Nov. 15 and Dec. 15 to keep the government running smoothly.

]]>http://fortune.com/2015/09/25/boehner-resigns-economy/feed/0Speaker of the House John BoehnerchristopherrmatthewsBoehner resignation complicates Congressional to-do listhttp://fortune.com/2015/09/25/boehner-resignation-complicates-agenda/
http://fortune.com/2015/09/25/boehner-resignation-complicates-agenda/#respondFri, 25 Sep 2015 15:35:17 +0000http://fortune.com/?p=1331447]]>John Boehner's shock decision to resign as House Speaker at the end of next month reorders an already-complicated Congressional to-do list for the remainder of the year.

In the immediate term, lawmakers appear to have forged a compromise to avoid a government shutdown. Hard-right conservative Republicans -- the same crowd angling for Boehner's ouster -- have been threatening a revolt over any government funding package that includes continued federal support for Planned Parenthood.

But on Friday, representatives for that group indicated they would accept an agreement hatched by leadership to pass a short-term patch. The plan will fund federal operations into December, averting a shutdown that would otherwise result when government agencies run out of money at the end of this month. A similar budget impasse forced a two-week shutdown in 2013.

Boehner, the sudden short-termer, is then set to use a separate legislative process known as reconciliation to hotwire a bill stripping funding for Planned Parenthood, and, possibly, the Affordable Care Act. That would draw a veto from President Obama, setting up a new fight in Congress over sustaining it that would likely fall to Boehner's successor to manage.

A potentially trickier problem lies just around the bend. The U.S. passed its $18.1 trillion borrowing limit in March, forcing the Treasury Department to use special maneuvers since to continue servicing the country's debt. But the feds are expected to exhaust those accounting moves sometime between late October and early December, forcing lawmakers to lift the debt ceiling to avoid a default. It's unclear what price conservative hardliners will demand for agreeing to support such an increase in U.S. borrowing authority.

Managing the three-dimensional chess of these challenges atop a deeply divided House Republican conference proved tricky enough for a veteran like Boehner. How his replacement would handle them following a potentially draining succession battle remains to be seen.

And then there’s the chance that Boehner tries to tackle the issue himself before he packs up for good. Freed from worry about an always-looming conservative coup, the Ohio Republican could forge a deal, for example, that relies on Democratic votes to lift the debt ceiling. President Obama nodded toward that possibility in his first comments on Boehner’s announcement. Appearing alongside Chinese President Xi Jinping in a Rose Garden news conference Friday, Obama praised the spirit of compromise that Boehner brought to his work and noted that he still has roughly a month left on the job. “Hopefully he feels like getting as much stuff done as he possibly can,” the president said.

]]>http://fortune.com/2015/09/25/boehner-resignation-complicates-agenda/feed/01280x720-23torynewmyerU.S. House narrowly passes spending bill, averts government shutdownhttp://fortune.com/2014/12/11/u-s-house-narrowly-passes-spending-bill-averts-govt-shutdown/
http://fortune.com/2014/12/11/u-s-house-narrowly-passes-spending-bill-averts-govt-shutdown/#respondFri, 12 Dec 2014 04:18:39 +0000http://fortune.com/?p=901748]]>(REUTERS) – The U.S. House of Representatives narrowly passed a $1.1 trillion spending bill to avert a government shutdown on Thursday less than three hours before a midnight deadline, overcoming strenuous Democratic objections to controversial financial provisions.

Shortly after the 219-206 vote, the House passed a 48-hour extension of funding to keep government offices open while the Senate considers the broader measure.

Senate Democratic leader Harry Reid said the Senate would begin that debate on Friday.

The spending bill was nearly killed earlier on Thursday by a revolt among Democrats over provisions to roll back part of the Dodd-Frank financial reform law and allow more big money political donations.

But President Barack Obama and his administration waged a last-ditch campaign to persuade Democrats to set aside their objections, arguing that if it failed, the party would get a worse spending deal next year when Republicans take control of the Senate and have a stronger House majority.

The effort to save the bill marked a rare moment of teamwork between Obama and House Speaker John Boehner, who simultaneously worked to persuade conservative Republicans to support it.

In the end, 67 Republicans voted against the measure, largely because it failed to take action to stop Obama’s executive immigration order. But that was offset by 57 Democrats who voted in favor.

The 1,603-page measure, negotiated by Republican and Democratic appropriators and leaders, drew Democrats’ ire when they discovered it would kill planned restrictions on derivatives trading by large banks, allowing them to continue trading swaps and futures in units that benefit from federal deposit insurance and Federal Reserve loans.

If passed by the Senate, the spending bill would provide the Department of Homeland Security with funds through Feb. 27. Republicans intend to deny funding to the agency to carry out Obama’s order allowing millions of undocumented immigrants to stay and work in the United States.

Nine days into the first government shutdown in 17 years, and the debate rages on about the budget, debt ceiling, and whether the U.S. has become a global laughingstock. As the days progress, everyone — from politicians to furloughed workers - is wondering how long the shutdown will continue and what the damage will be in the near and long term.

Though disputes over Obamacare were initially at the heart of the economic debate, the potential for default on the $16.7 trillion debt has now moved front and center. This debt is due to a persistent government deficit, whereby U.S. spending exceeds revenue. According to the Congressional Budget Office, the projected deficit for 2013 is approaching $700 billion.

Notably, the IRS thinks it can solve more than half of the deficit by addressing the tax gap; the gap between what the IRS believes it is owed and what Americans have actually paid. According to the Government Accountability Office this tax gap is estimated to be $450 billion. A significant portion of that gap (pdf) is attributed to the misclassification of workers as independent contractors, rather than as full-time employees.

However, the real problem is not actually worker "misclassification." The problem is an antiquated tax code that does not address the reality of the American employment landscape. This shutdown should serve as a wake-up call to both the IRS and the government that we need to adjust how we tax labor — and fast.

When businesses employ full-time workers, taxes are withheld directly from those salaries and paid to the government. The amount that's withheld includes federal, state, and local tax estimates, social security and Medicare deductions, unemployment insurance, and workers compensation insurance.

If all of that sounds like a lot - that's because it is. It's expensive to be a full-time employee, or, said differently, the IRS collects lots of money from the United States full-time workforce.

Conversely, independent contractors who file an IRS Tax Form 1099 don't have taxes directly withheld from their payments. Instead, that worker pays taxes as an independent business. Self-employed workers don't pay into unemployment or workers compensation insurance programs, so the IRS collects less money in support of these services. (Practically speaking, 1099 workers are not entitled to these services, yet some do still try — at times, successfully– to obtain unemployment and workers comp payments).

Some 1099 workers may try (illegally!) to take advantage of self-reporting. They may not report all of their income, or they may over-report expense deductions — neither of which full-time employees can get away with.

The government makes less money from 1099 workers, which is why it's going through employment arrangements with a fine-tooth comb these days, looking for ways to impose penalties on misclassified workers and collect unpaid tax revenues.

It's easy to understand why the IRS has taken this route: the government needs money, plain and simple, and according to our antiquated tax laws, this seems to be a reasonable way to try and find it. But this kind of enforcement is actually causing more harm than good, especially when it comes to job creation.

We live in a freelance economy — a fact that is good for both employers and workers. From a business perspective, labor has historically been one of the greatest fixed costs of doing business. Using contractors gives businesses the opportunity to convert that fixed cost into a variable one. Moreover, companies want to engage labor on a freelance basis, and many people want the freedom to work this way.

During every cyclical economic downturn, an increase in temporary labor serves as a leading indicator of a hiring rebound. This time, however, the increases in temporary labor point more to structural changes in the labor economy than to a proper recovery in full-time hiring.

Whether these changes are being driven by technology, the emergence of online job search exchanges, regulatory and fiscal uncertainty, or specific regulatory frameworks such as Obamacare, we won't know for some time. What is clear, though, is the labor pool is rapidly shifting to freelance. The Freelancers Union, for example, estimates that there are now 42 million American independent workers, up from 10.3 million workers in 2005.

The freelance economy is here to stay, and the government needs to catch up. Calling this kind of mutually beneficial work arrangement a misclassification doesn't serve anyone well.

The solution is not to enforce against what was, but to adjust the system to the changing labor landscape. For example, by creating a system that taxes individual workers equally, regardless of how that person earns a living, the government collects the revenue it needs to deliver the services its citizens require.

I recognize "misclassification" is only one piece of the tax gap. Nonetheless, it's important to recognize the role the freelance economy plays in U.S. economic development and job creation.

Businesses for sure will breathe a sigh of relief if they don't have to worry about classifying someone incorrectly. As a result, we can expect to see businesses hiring even more workers and creating a larger supply of opportunities for jobseekers.

]]>bkrasnoveLarry Summers on a shutdown: The risks this time are greaterhttp://fortune.com/2011/04/08/larry-summers-on-a-shutdown-the-risks-this-time-are-greater/
Fri, 08 Apr 2011 22:51:27 +0000http://test-alley.fortune.com/2011/04/08/larry-summers-on-a-shutdown-the-risks-this-time-are-greater/]]>

The first shutdown of the federal government in 15 years now looks more likely than not. Less clear is what that event would mean for the economy. For some perspective, Fortune talked to Larry Summers, who was Deputy Secretary of the Treasury during the 1995-1996 shutdown, before going on to lead the department, serve as president of Harvard University, and make a return to Washington as President Obama's top economic adviser. Now teaching back at Harvard, Summers says if Democrats and Republicans have a similar stalemate on lifting the debt ceiling, the results would be cataclysmic.

How severe was the economic impact of the last shut down?

I think it was damaging to confidence and had some mild impact in directly reducing the GDP. But it was not a catastrophic event because people perceived it would be relatively temporary.

Is that same dynamic at work here?

The last shutdown came at a moment when the economy was riding high. The economy is now riding pretty low in the water, so the risks are significantly greater.

To confidence, or in terms of the direct impact?

The adverse effects of a reduction in confidence are greater and the direct effect's the same, but it will potentially have a larger effect at a moment when there's less positive going on than there was then.

How does it compare to uncertainty sown by the threat of a default on our debt?

A default on the debt is of a different order. An actual default on the debt would be a catastrophic event that would cast shadows for years to come. I can't conceive that the debt limit stuff will actually end in our default. But if it did, that would be cataclysmic.

But is the threat of a default already hurting confidence?

I think markets do not yet have in view any real probability of a default. And if that were ever to change, it would be very serious indeed.

Beyond this funding debate, Congress has a much tougher fight looming on the 2012 budget and entitlement reform. What do you make of Paul Ryan's proposal?

I share the objective of getting the debt under control but think that it is a constellation of magic asterisks and unspelled-out assumptions -- the medium and long-run judgments about how much government spends -- and there's nothing terribly specific in it in describing what the actual cuts will be. There's much less there than meets the eye.

Is the White House ready to engage seriously in a debate on entitlement reform?

I don't want to speak for the White House. I just don't want to do that.

Should we be looking to raise revenue from tax reform as part of the mix?

The deficit problem is serious enough that we're going to need both revenue increases and expenditure cuts.

House Republicans are aiming for a corporate top rate of 25%. Is that achievable?

Not without extraordinary base-broadening.

So that would involve getting into the mortgage and charity deductions?
Let me leave it the way I said it.